HHS Finalizes Remedy on 340B Underpayments to Hospitals

The Department of Health and Human Services (HHS) finalized its rule detailing how it will repay hospitals for 340B Drug Pricing Program underpayments. The final rule stems from the Supreme Court’s invalidation of cuts by the Centers for Medicare & Medicaid Services (CMS) to 340B reimbursement in 2018, which dropped payment from average sales price (ASP) plus 6% to ASP minus 22.5%.  

ASHP previously provided CMS with comments on the 340B repayment structure. On initial review, the key elements of the final repayment include:

• A one-time $9 billion lump sum payment (which includes the higher amount that would have been paid to hospitals in beneficiary copayments) to the more than 1,600 covered entities impacted by the reimbursement cuts;
• The payment will be budget neutral, so CMS is proposing to offset the cost of the lump sum payment by cutting reimbursement for non-drug services over a number of years; and 
• Hospitals that enrolled in Medicare after 2018 will be exempt from the proposed cuts to non-drug services reimbursement.

As ASHP requested in its comments on the proposed rule, the final rule outlines a process for hospitals to dispute an erroneous underpayment amount. ASHP encourages hospitals to review the amounts they are due (appearing in Appendix AAA) and to notify CMS promptly of the error. Specifically, CMS directs hospitals to email CMS at the following address, [email protected], no later than 11:59 p.m. ET on Nov. 30, 2023. Submissions must include (1) a description of the nature of the error; (2) a designated contact person for the purposes of addressing the error; and (3) relevant supporting documentation such as claim numbers, total units, payment amount received, date of payment. CMS will pay the lump sum to an affected 340B covered entity hospital using this process after the alleged calculation error has been reviewed and resolved by CMS.

“ASHP is pleased that hospitals will finally be made whole for CMS’s unlawful reimbursement cuts from 2018-2022,” said Tom Kraus, ASHP vice president of government relations. “However, we remain deeply concerned that the unnecessary offset cuts to non-drug services reimbursement are punitive, functioning as a de facto means to claw back reimbursement due for 340B program cuts, and will harm already strained hospitals, potentially reducing access and services for patients.”

ASHP remains staunchly committed to protecting and preserving the 340B program. We encourage members to submit any questions or concerns regarding the 340B underpayment final rule to Jillanne Schulte Wall, ASHP Senior Director of Health & Regulatory Policy.